SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "AGREEMENT"), dated as of June 12, 1998,
by and among Argosy Gaming Company, a Delaware corporation, with headquarters
located at 000 Xxxxx Xxxxxx, Xxxxx, Xxxxxxxx 00000-0000 (the "COMPANY"), and
the investors listed on the Schedule of Buyers attached hereto (individually, a
"BUYER" and collectively, the "BUYERS").
WHEREAS:
A. The Company and the Buyers are executing and delivering this Agreement
in reliance upon the exemption from securities registration afforded by Rule 506
of Regulation D ("REGULATION D") as promulgated by the United States Securities
and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended
(the "1933 ACT");
B. The Company has authorized the following new series of its Preferred
Stock, par value $.01 per share (the "PREFERRED STOCK"): the Company's Series A
Convertible Preferred Stock (the "PREFERRED SHARES"), which shall be convertible
into shares of the Company's Common Stock, par value $.01 per share (the "COMMON
STOCK") (as converted, the "CONVERSION SHARES"), in accordance with the terms of
the Company's Certificate of Designations, Preferences and Rights of the
Preferred Shares, substantially in the form attached hereto as EXHIBIT A (the
"CERTIFICATE OF DESIGNATIONS");
C. The Buyers wish to purchase, upon the terms and conditions stated in
this Agreement, initially an aggregate of up to 800 of the Preferred Shares (the
"INITIAL PREFERRED SHARES") in the respective amounts set forth opposite each
Buyer's name on the Schedule of Buyers and one warrant for each Preferred Share
purchased, in substantially the form attached hereto as EXHIBIT E (the
"WARRANT"), to acquire that number of shares of Common Stock (the "WARRANT
SHARES") equal to $500 divided by the Warrant Value (as defined in Section
1(g));
D. Subject to the terms and conditions set forth in this Agreement, each
Buyer has the right to purchase a number of additional Preferred Shares, along
with the related Warrants, equal to up to the sum of (i) the number of Initial
Preferred Shares held by such Buyer on the date which is 270 days after the
Initial Closing Date (as defined in Section 1(b)) and (ii) the number of Initial
Preferred Shares converted by such Buyer at a Conversion Price equal to the
Fixed Conversion Price (each as defined in the Certificate of Designations) of
such Initial Preferred Shares on or prior to the date which is 270 days after
the Initial Closing Date (the "ADDITIONAL PREFERRED SHARES"). In addition,
subject to the terms and conditions set forth in this Agreement, the Company has
the right to cause the Buyers to purchase up to an aggregate of 800 Preferred
Shares, along with the related Warrants, (pro rata based on the number of
Initial Preferred Shares each Buyer purchased in relation to the total number of
Initial Preferred
Shares) (the "PUT PREFERRED SHARES") (the Initial Preferred Shares, the
Additional Preferred Shares and the Put Preferred Shares collectively are
referred to in this Agreement as the "PREFERRED SHARES"). The Preferred
Shares, the Conversion Shares, the Warrants, the Warrant Shares and any
shares of Common Stock (the "REGISTRATION DELAY PAYMENT SHARES") issued as
payment of Registration Delay Payments (as defined in the Registration Rights
Agreement referred to below) are collectively referred to in this Agreement
as the "SECURITIES"; and
E. Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement
substantially in the form attached hereto as EXHIBIT B (the "REGISTRATION RIGHTS
AGREEMENT") pursuant to which the Company has agreed to provide certain
registration rights under the 1933 Act and the rules and regulations promulgated
thereunder, and applicable state securities laws.
NOW THEREFORE, the Company and the Buyers hereby agree as follows:
1. PURCHASE AND SALE OF PREFERRED SHARES.
a. PURCHASE OF PREFERRED SHARES. Subject to satisfaction (or
waiver) of the conditions set forth in Sections 6(a) and 7(a), the Company shall
issue and sell to the Buyers and the Buyers severally shall purchase from the
Company an aggregate of up to 800 Initial Preferred Shares, along with the
related Warrants, in the respective amounts set forth opposite each Buyer's name
on the Schedule of Buyers (the "INITIAL CLOSING"). Subject to Section 1(h) and
satisfaction (or waiver) of the conditions set forth in Sections 1(c), 6(b) and
7(b), at the option of each Buyer, the Company shall issue and sell to each such
Buyer and each such Buyer shall purchase from the Company at multiple closings,
if applicable, an aggregate of up to that number of Additional Preferred Shares,
along with the related Warrants, equal to the sum of (i) the number of Initial
Preferred Shares held by such Buyer on the date which is 270 days after the
Initial Closing Date, and (ii) the number of Initial Preferred Shares converted
by such Buyer at a Conversion Price equal to the Fixed Conversion Price on or
prior to the date which is 270 days after the Initial Closing Date (the
"ADDITIONAL CLOSINGS"). Subject to Section 1(h) and satisfaction (or waiver) of
the conditions set forth in Sections 1(d), 1(e), 6(c) and 7(c), the Company may
require that each Buyer purchase in the aggregate that number of Put Preferred
Shares, along with the related Warrants, equal to such Buyer's pro rata portion
of up to 800 Preferred Shares (based on the number of Initial Preferred Shares
each Buyer purchased in relation to the total number of Initial Preferred Shares
purchased by the Buyers) in one or two closings (the "PUT CLOSINGS"). The
Initial Closing, the Additional Closings and the Put Closings collectively are
referred to in this Agreement as the "CLOSINGS." The purchase price (the
"PURCHASE PRICE") of each Preferred Share and the related Warrant at each of the
Closings shall be $10,000.
b. THE INITIAL CLOSING DATE. The date and time of the Initial
Closing (the "INITIAL CLOSING DATE") shall be 10:00 a.m. Central Time within
three (3) business days following the date hereof, subject to satisfaction (or
waiver) of the conditions to the Initial Closing set forth in Sections 6(a) and
7(a) (or such later date as is mutually agreed to by the
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Company and the Buyers). The Initial Closing shall occur on the Initial
Closing Date at the offices of Xxxxxx Xxxxxx & Xxxxx, 000 Xxxx Xxxxxx Xxxxxx,
Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000-0000.
c. THE ADDITIONAL CLOSING DATES. The date and time of each of the
Additional Closings (the "ADDITIONAL CLOSING DATES") shall be 10:00 a.m. Central
Time on the date specified in an Additional Share Notice (as defined below),
subject to satisfaction (or waiver) of the conditions to the Additional Closing
set forth in Sections 6(b) and 7(b) and the conditions set forth in this
paragraph (or such later date as is mutually agreed to by the Company and the
Buyers). During the period (the "BUYER CALL RIGHT PERIOD") beginning on and
including the date which is the earlier of (A) 270 days after the Initial
Closing Date, and (B) the first date on which such Buyer converts any Initial
Preferred Shares at a Conversion Price equal to the Fixed Conversion Price for
such Initial Preferred Shares, and ending on and including the date which is 450
days after the Initial Closing Date, but subject to Section 1(h) and the
requirements of Sections 6(b) and 7(b), each Buyer may purchase Additional
Preferred Shares, along with the related Warrants, by delivering written notice
to the Company (an "ADDITIONAL SHARE NOTICE") at least three business days but
not more than 20 business days prior (an "ADDITIONAL SHARE NOTICE DATE") to the
Additional Closing Date set forth in such Buyer's Additional Share Notice. Each
Additional Share Notice shall set forth (i) the number of Additional Preferred
Shares, along with the related Warrants, to be purchased by such Buyer at the
Additional Closing, (ii) the aggregate Purchase Price for such Additional
Preferred Shares and the related Warrants, and (iii) the date selected by the
Buyer for the Additional Closing Date. Notwithstanding the foregoing, no Buyer
shall be entitled to deliver an Additional Share Notice unless on the date of
the delivery of the Additional Share Notice the Closing Bid Price (as defined in
the Certificate of Designations) of the Common Stock is greater than the Closing
Bid Price of the Common Stock on the Initial Closing Date and each Buyer,
including any assignees of such Buyer, may only exercise its right to purchase
Additional Preferred Shares at an aggregate of two Additional Closings. Each
Additional Closing shall occur on the applicable Additional Closing Date at the
offices of Xxxxxx Xxxxxx & Xxxxx, 000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxxxxx 00000-0000.
d. THE PUT CLOSING DATE. The date and time of each Put Closing
(the "PUT CLOSING DATE") shall be 10:00 a.m. Central Time on the date specified
in the Company's Put Share Notice (as defined below), subject to satisfaction
(or waiver) of the conditions to the Put Closing set forth in Sections 6(c) and
7(c) and the conditions set forth in Section 1(e) (or such later date as is
mutually agreed to by the Company and the Buyers). During the period (the
"COMPANY PUT RIGHT PERIOD") beginning on and including the date which is 270
days after the Initial Closing Date and ending on and including the date which
is 450 days after the Initial Closing Date, but subject to Section 1(h), the
requirements of Sections 6(c) and 7(c) and satisfaction of the Put Notice
Conditions (as defined in Section 1(e)), the Company may require each Buyer to
purchase Put Preferred Shares, along with the related Warrants, by delivering
written notice to each of the Buyers (a "PUT SHARE NOTICE") at least 15 business
days but not more than 20 business days (the "PUT SHARE NOTICE DATE") prior to
the Put Closing Date set forth in the Put Share Notice. The Put Share Notice
shall set forth (i) each Buyer's pro rata
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portion (based on the number of Initial Preferred Shares each Buyer purchased
in relation to the total number of Initial Preferred Shares purchased by the
Buyers) of the aggregate number of Put Preferred Shares (which aggregate
number shall not exceed 800 Preferred Shares), along with the related
Warrants, which the Company is requiring each Buyer to purchase at the Put
Closing, (ii) the aggregate Purchase Price for each such Buyer's Put
Preferred Shares and the related Warrants, and (iii) the date selected by the
Company for the Put Closing Date, which Put Closing Date shall be not later
than the date which is 450 days after the Initial Closing Date. Each Put
Closing shall occur on the applicable Put Closing Date at the offices of
Xxxxxx Xxxxxx & Xxxxx, 000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx
00000-0000. The Initial Closing Date, the Additional Closing Dates and the
Put Closing Dates collectively are referred to in this Agreement as the
"CLOSING DATES."
e. THE PUT NOTICE CONDITIONS. Notwithstanding anything in this
Agreement to the contrary, the Company shall not be entitled to deliver a Put
Share Notice and require the Buyers to purchase the Put Preferred Shares unless,
in addition to the satisfaction (or waiver) of the requirements of Sections 6(c)
and 7(c), all of the following conditions (the "PUT NOTICE CONDITIONS") are
satisfied: (i) the Company's stockholders shall have approved the issuance of
the Conversion Shares and the Warrant Shares on or prior to the Put Share Notice
Date; (ii) during the period beginning on and including the date which is 60
business days prior to the Put Closing Date and ending on and including the Put
Closing Date, the registration statement (the "REGISTRATION STATEMENT") covering
the resale of the Conversion Shares and Warrant Shares (as defined in Section
2(a)) has been declared effective by the SEC and at all times has been effective
and available for the sale of no less than 125% of the sum of (A) the number of
Conversion Shares then issuable upon the conversion of all outstanding Preferred
Shares and the Put Preferred Shares to be issued by the Company, (B) the number
of Warrant Shares then issuable upon exercise of all outstanding Warrants and
the Warrants to be issued in connection with the Put Preferred Shares, and (C)
the number of Conversion Shares and Warrant Shares that are then held by the
Buyers; (iii) during the period beginning on the Initial Closing Date and ending
on and including the Put Closing Date, the Common Stock is listed on The New
York Stock Exchange, Inc. ("NYSE") and has not been suspended from trading at
any time during such period (excluding suspensions of not more than one day
resulting from business announcements), has not been delisted at any time during
such period, nor is there any pending or threatened delisting or suspension;
(iv) no event constituting a Major Transaction (as defined in Section 3(c) of
the Certificate of Designations), including an agreement to consummate a Major
Transaction, or a Triggering Event (as defined in Section 3(d) of the
Certificate of Designations) shall have occurred nor shall any pending event
which would constitute a Major Transaction have been publicly disclosed from the
period beginning on and including the Initial Closing Date and ending on and
including the Put Closing Date; (v) on each day during the period beginning on
and including the date which is 20 business days prior to the Put Closing Date
and ending on and including the Put Closing Date, the Closing Bid Price of the
Common Stock is not less than the Fixed Conversion Price for the Initial
Preferred Shares on the Initial Closing Date; (vi) on each trading day during
the period beginning on and including the Put Share Notice Date and ending on
and including the Put Closing Date, the Floating Conversion Price (as defined in
the Certificate of Designations) is not less than 90% of the Floating
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Conversion Price on the Put Share Notice Date; (vii) during the period
beginning on the Initial Closing Date and ending on and including the Put
Closing Date, the Company shall have delivered Conversion Shares upon
conversion of the Preferred Shares and Warrant Shares upon exercise of the
Warrants to the Buyers on a timely basis as set forth in Section 2(f)(ii) of
the Certificate of Designations and Sections 2(a) and 2(b) of the Warrants,
respectively; and (viii) not more than one other Put Closing Date shall have
occurred previously.
f. FORM OF PAYMENT. On each of the Closing Dates, (i) each Buyer
shall pay the Purchase Price to the Company for the Preferred Shares and the
related Warrants to be issued and sold to such Buyer at the respective Closing,
by wire transfer of immediately available funds in accordance with the Company's
written wire instructions; and (ii) the Company shall deliver to each Buyer (A)
stock certificates (in the denominations as such Buyer shall request) (the
"STOCK CERTIFICATES") representing such number of Preferred Shares which such
Buyer is then purchasing, and (B) the related Warrants which the Buyer is then
purchasing at the respective Closing, duly executed on behalf of the Company and
registered in the name of such Buyer or its designee.
g. WARRANTS. In connection with the purchase of Preferred Shares
pursuant to this Agreement, the Buyers shall also receive one Warrant for each
Preferred Share purchased to acquire that number of Warrant Shares equal to $500
divided by the Warrant Value. For purposes of the Initial Closing, "WARRANT
VALUE" shall mean $1.366997 For purposes of the Additional Closings and the Put
Closings, "WARRANT VALUE" shall mean the value of the Warrant as of the
applicable Closing Date as determined by use of the Black-Scholes valuation
model or by use of such other valuation model as the parties shall mutually
agree upon. The determination of the Warrant Value shall be made by Buyers of a
majority of the Preferred Shares to be purchased at the Additional Closing or
Put Closing, as the case may be, subject to the Company's right to object as
described below. Such Buyers shall notify the Company in writing of such
Warrant Value (i) for an Additional Closing, in the Additional Share Notice, or
(ii) for a Put Closing, at least five business days prior to the Put Closing
Date set forth in the Put Share Notice. If the Company does not object in
writing to such Buyers' determination of the Warrant Value within two business
days after receipt of written notice of such Buyers' determination, then the
Warrant Value on the applicable Closing Date shall be the Warrant Value
determined by such Buyers. If the Company objects in writing to such Buyers'
determination of the Warrant Value and the parties cannot agree on the Warrant
Value within one business day of the Buyers' receipt of the Company's notice of
objection, then the Company shall immediately submit the disputed Warrant Value
determination to Xxxxxxx Xxxxx Xxxxxx (or any successor thereto) or to another
independent, reputable investment bank acceptable to the Buyers of a majority of
the Preferred Shares being purchased at the applicable Closing. Such investment
bank's determination shall be binding upon all parties absent manifest error.
No Additional Closing or Put Closing shall occur until the Warrant Value with
respect to such Closing shall have been determined in the manner described
above.
h. LIMITATIONS ON ADDITIONAL PREFERRED SHARES AND PUT PREFERRED
SHARES. Notwithstanding anything contained in this Agreement to the contrary,
the total number of
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Preferred Shares issued by the Company at all Additional Closings and Put
Closings shall not exceed 800 Preferred Shares in the aggregate. In
addition, the total number of Preferred Shares purchased by any Buyer at all
Additional Closings and Put Closings shall not in the aggregate exceed the
number of Initial Preferred Shares purchased by such Buyer.
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
Each Buyer represents and warrants with respect to only itself that:
a. INVESTMENT PURPOSE. Such Buyer (i) is acquiring the Preferred
Shares and the Warrants, (ii) upon conversion of the Preferred Shares, will
acquire the Conversion Shares then issuable, and (iii) upon exercise of the
Warrants, will acquire the Warrant Shares for its own account for investment
only and not with a view towards, or for resale in connection with, the public
sale or distribution thereof, except pursuant to sales registered or exempted
under the 1933 Act; provided, however, that by making the representations
herein, such Buyer does not agree to hold any of the Securities for any minimum
or other specific term and reserves the right to dispose of the Securities at
any time in accordance with or pursuant to a registration statement or an
exemption under the 1933 Act.
b. ACCREDITED INVESTOR STATUS. Such Buyer is an "accredited
investor" as that term is defined in Rule 501(a) of Regulation D.
c. RELIANCE ON EXEMPTIONS. Such Buyer understands that the
Securities are being offered and sold to it in reliance on specific exemptions
from the registration requirements of United States federal and state securities
laws and that the Company is relying in part upon the truth and accuracy of, and
such Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of such Buyer
to acquire the Securities.
d. INFORMATION. Such Buyer and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Securities
which have been requested by such Buyer. Such Buyer and its advisors, if any,
have been afforded the opportunity to ask questions of the Company. Neither
such inquiries nor any other due diligence investigations conducted by such
Buyer or its advisors, if any, or its representatives shall modify, amend or
affect such Buyer's right to rely on the Company's representations and
warranties contained in Sections 3 and 9(m). Such Buyer understands that its
investment in the Securities involves a high degree of risk. Such Buyer has
sought such accounting, legal and tax advice as it has considered necessary to
make an informed investment decision with respect to its acquisition of the
Securities.
e. NO GOVERNMENTAL REVIEW. Such Buyer understands that no United
States federal or state agency or any other government or governmental agency
has passed on or made any recommendation or endorsement of the Securities or the
fairness or suitability of the
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investment in the Securities nor have such authorities passed upon or
endorsed the merits of the offering of the Securities.
f. TRANSFER OR RESALE. Such Buyer understands that, except as
provided in the Registration Rights Agreement: (i) the Securities have not been
and are not being registered under the 1933 Act or any state securities laws,
and may not be offered for sale, sold, assigned or transferred unless (A)
subsequently registered thereunder, (B) such Buyer shall have delivered to the
Company an opinion of counsel, in a generally acceptable form, to the effect
that the Securities to be sold, assigned or transferred may be sold, assigned or
transferred pursuant to an exemption from such registration, or (C) such Buyer
provides the Company with reasonable assurance that the Securities can be sold,
assigned or transferred pursuant to Rule 144 promulgated under the 1933 Act (or
a successor rule thereto)("RULE 144"); (ii) any sale of the Securities made in
reliance on Rule 144 may be made only in accordance with the terms of Rule 144
and further, if Rule 144 is not applicable, any resale of the Securities under
circumstances in which the seller (or the person through whom the sale is made)
may be deemed to be an underwriter (as that term is defined in the 0000 Xxx) may
require compliance with some other exemption under the 1933 Act or the rules and
regulations of the SEC thereunder; and (iii) neither the Company nor any other
person is under any obligation to register such Securities under the 1933 Act or
any state securities laws or to comply with the terms and conditions of any
exemption thereunder.
g. LEGENDS. Such Buyer understands that the certificates or other
instruments representing the Preferred Shares and the Warrants and, until such
time as the sale of the Conversion Shares and the Warrant Shares have been
registered under the 1933 Act as contemplated by the Registration Rights
Agreement, the stock certificates representing the Conversion Shares and the
Warrant Shares, except as set forth below, shall bear a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of such stock certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144
UNDER SAID ACT.
The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Securities upon which it is
stamped, if (i) such Securities are registered for sale under the 1933 Act, (ii)
in connection with a sale transaction, such holder
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provides the Company with an opinion of counsel, in a generally acceptable
form, to the effect that a public sale, assignment or transfer of such
Securities may be made without registration under the 1933 Act, or (iii) such
holder provides the Company with reasonable assurances that such Securities
can be sold without restriction pursuant to Rule 144(k). Each Buyer
acknowledges, covenants and agrees to sell the Securities represented by a
certificate(s) from which the legend has been removed, only pursuant to (i) a
registration statement effective under the 1933 Act, or (ii) advice of
counsel that such sale is exempt from registration required by Section 5 of
the 1933 Act.
h. AUTHORIZATION; ENFORCEMENT. This Agreement has been duly
and validly authorized, executed and delivered on behalf of such Buyer and is
a valid and binding agreement of such Buyer enforceable against such Buyer in
accordance with its terms, subject as to enforceability to general principles
of equity and to applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation and other similar laws relating to, or affecting
generally, the enforcement of applicable creditors' rights and remedies.
i. RESIDENCY. Such Buyer is a resident of that country or
jurisdiction specified on the Schedule of Buyers.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the Buyers that:
a. ORGANIZATION AND QUALIFICATION. The Company and its
"Subsidiaries" (which for purposes of this Agreement means any entity in which
the Company, directly or indirectly, owns capital stock or holds an equity or
similar interest) (a complete list of which is set forth in SCHEDULE 3(a)) are
corporations duly organized and validly existing in good standing under the laws
of the jurisdiction in which they are incorporated, and have the requisite
corporate power and authorization to own their properties and to carry on their
business as now being conducted. Each of the Company and its Subsidiaries is
duly qualified as a foreign corporation to do business and is in good standing
in every jurisdiction in which its ownership of property or the nature of the
business conducted by it makes such qualification necessary, except to the
extent that the failure to be so qualified or be in good standing would not have
a Material Adverse Effect. As used in this Agreement, "MATERIAL ADVERSE EFFECT"
means any material adverse effect on the business, properties, assets,
operations, results of operations or financial condition of the Company and its
Subsidiaries, if any, taken as a whole, or on the transactions contemplated
hereby or by the agreements and instruments to be entered into in connection
herewith, or on the authority or ability of the Company to perform its
obligations under the Transaction Documents (as defined below) or the
Certificate of Designations.
b. AUTHORIZATION; ENFORCEMENT; COMPLIANCE WITH OTHER INSTRUMENTS.
(i) The Company has the requisite corporate power and authority to enter into
and perform this Agreement, the Warrants, the Registration Rights Agreement, and
the Irrevocable Transfer Agent Instructions (as defined in Section 5) and each
of the other agreements entered into by the
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parties hereto in connection with the transactions contemplated by this
Agreement (collectively, the "TRANSACTION DOCUMENTS"), and to issue the
Securities in accordance with the terms hereof and thereof; (ii) the
execution and delivery of the Transaction Documents and the Certificate of
Designations by the Company and the consummation by it of the transactions
contemplated hereby and thereby (including, without limitation, the issuance
of the Preferred Shares and the Warrants and the reservation for issuance and
the issuance of the Conversion Shares and the Warrant Shares issuable upon
conversion or exercise, as the case may be) have been duly authorized by the
Company's Board of Directors and no further consent or authorization is
required by the Company, its Board of Directors or its stockholders, except
for, if required by NYSE, approval by its stockholders prior to the issuance
of a number of shares of Common Stock equal to or in excess of 20% of the
number of shares of Common Stock outstanding immediately prior to the Initial
Closing Date; (iii) the Transaction Documents have been duly executed and
delivered by the Company; (iv) the Transaction Documents constitute the valid
and binding obligations of the Company enforceable against the Company in
accordance with their terms, except as such enforceability may be limited by
general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors' rights and remedies; and
(v) prior to each of the Closing Dates, the Certificate of Designations will
have been filed with the Secretary of State of the State of Delaware and will
be in full force and effect, enforceable against the Company in accordance
with its terms.
c. CAPITALIZATION. As of the date hereof, the authorized capital
stock of the Company consists of (i) 60,000,000 shares of Common Stock, of which
as of the date hereof, 24,498,333 shares were issued and outstanding, 2,550,000
shares are issuable and reserved for issuance pursuant to the Company's stock
option and purchase plans and 6,497,175 shares are issuable and reserved for
issuance pursuant to securities (other than the Preferred Shares and the
Warrants) exercisable or exchangeable for, or convertible into, shares of Common
Stock; (ii) 10,000,000 shares of Preferred Stock, of which as of the date
hereof, none were issued and outstanding; and (iii) 85 shares of redeemable
common stock, of which as of the date hereof, none were issued and outstanding.
All of such outstanding shares have been, or upon issuance will be, validly
issued and are fully paid and nonassessable. Except as disclosed in SCHEDULE
3(c), (i) no shares of the Company's capital stock are subject to preemptive
rights or any other similar rights or any liens or encumbrances suffered or
permitted by the Company; (ii) there are no outstanding debt securities; (iii)
there are no outstanding options, warrants, scrip, rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any of its
Subsidiaries, or contracts, commitments, understandings or arrangements by which
the Company or any of its Subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its Subsidiaries or
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its Subsidiaries; (iv) there
are no agreements or arrangements under which the Company or any of its
Subsidiaries is obligated to register the sale of any of their securities under
the 1933 Act (except the Registration Rights Agreement); (v) there are no
outstanding securities of the Company or any of its Subsidiaries which contain
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any redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Company or any of
its Subsidiaries is or may become bound to redeem a security of the Company
or any of its Subsidiaries; (vi) there are no securities or instruments
containing anti-dilution or similar provisions that will be triggered by the
issuance of the Securities as described in this Agreement; and (vii) the
Company does not have any stock appreciation rights or "phantom stock" plans
or agreements or any similar plan or agreement. The Company has furnished to
the Buyers true and correct copies of the Company's Certificate of
Incorporation, as amended and as in effect on the date hereof (the
"CERTIFICATE OF INCORPORATION"), and the Company's By-laws, as in effect on
the date hereof (the "BY-LAWS"), and the terms of all securities convertible
into or exercisable for Common Stock and the material rights of the holders
thereof in respect thereto.
d. ISSUANCE OF SECURITIES. The Preferred Shares and the Warrants
are duly authorized and, upon issuance in accordance with the terms hereof,
shall be (i) validly issued, fully paid and non-assessable, (ii) free from all
taxes, liens and charges with respect to the issue thereof and (iii) entitled to
the rights and preferences set forth in the Certificate of Designations and the
Warrants. 6,000,000 shares of Common Stock (subject to adjustment pursuant to
the Company's covenant set forth in Section 4(f) below) have been duly
authorized and reserved for issuance upon conversion of the Preferred Shares and
upon exercise of the Warrants. Upon conversion or exercise in accordance with
the Certificate of Designations or the Warrants (as the case may be) the
Conversion Shares and the Warrant Shares, and upon issuance the Registration
Delay Payment Shares, will be validly issued, duly listed, fully paid and
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof, with the holders being entitled to all rights accorded to a
holder of Common Stock. Subject to the truth and accuracy of each Buyer's
representations and warranties as to factual matters set forth in Section 2, the
issuance by the Company of the Securities is exempt from registration under the
1933 Act.
e. NO CONFLICTS. Except as disclosed in SCHEDULE 3(e), the
execution, delivery and performance of the Transaction Documents by the Company,
the performance by the Company of its obligations under the Certificate of
Designations and the Warrants and the consummation by the Company of the
transactions contemplated hereby and thereby (including, without limitation, the
reservation for issuance and issuance of the Conversion Shares and the Warrant
Shares) will not (i) result in a violation of the Certificate of Incorporation,
any Certificate of Designations, Preferences and Rights of any outstanding
series of Preferred Stock of the Company or the By-laws; (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any material agreement, indenture or
instrument to which the Company or any of its Subsidiaries is a party; or (iii)
result in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations and the rules and
regulations of the principal market or exchange on which the Common Stock is
traded or listed) applicable to the Company or any of its Subsidiaries or by
which any property or asset of the Company or any of its Subsidiaries is bound
or affected. Except as disclosed in SCHEDULE 3(e), neither the Company nor its
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Subsidiaries is in violation of any term of or in default under (x) its
Certificate of Incorporation, any Certificate of Designation, Preferences and
Rights of any outstanding series of Preferred Stock or By-laws or their
organizational charter or by-laws, respectively, or (y) any material
contract, agreement, mortgage, indebtedness, indenture, instrument, judgment,
decree or order or any statute, rule or regulation applicable to the Company
or its Subsidiaries. The business of the Company and its Subsidiaries is not
being conducted, and shall not be conducted, in violation of any law,
ordinance or regulation of any governmental entity, except for any violations
which individually or in the aggregate will not have a Material Adverse
Effect. Except as specifically contemplated by this Agreement and as required
under the 1933 Act, the Company is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court
or governmental agency or any regulatory or self-regulatory agency in order
for it to execute, deliver or perform any of its obligations under or
contemplated by the Transaction Documents or the Certificate of Designations
in accordance with the terms hereof or thereof. Except as disclosed in
SCHEDULE 3(e), all consents, authorizations, orders, filings and
registrations which the Company is required to obtain pursuant to the
preceding sentence have been obtained or effected on or prior to the date
hereof. The Management Employees (as defined below) of the Company and its
Subsidiaries have no knowledge of any facts or circumstances which might give
rise to any of the foregoing. The Company is not in violation of the listing
requirements of NYSE as in effect on the date hereof and on each of the
Closing Dates and is not aware of any facts which would reasonably lead to
delisting or suspension of the Common Stock by NYSE in the foreseeable
future. "MANAGEMENT EMPLOYEES" shall mean the officers and directors of the
Company and each of its Subsidiaries and the general managers of its casinos.
f. SEC DOCUMENTS; FINANCIAL STATEMENTS. Since December 31, 1996,
the Company has filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "1934 ACT")
(all of the foregoing filed prior to the date hereof and all exhibits included
therein and financial statements and schedules thereto and documents
incorporated by reference therein being hereinafter referred to as the "SEC
DOCUMENTS"). The Company has delivered to the Buyers or their respective
representatives true and complete copies of the SEC Documents. As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the 1934 Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents, and none of the SEC
Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. As of their
respective dates, the financial statements of the Company included in the SEC
Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto. Such financial statements have been prepared in accordance
with generally accepted accounting principles, consistently applied, during the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed or
summary statements) and fairly
-11-
present in all material respects the financial position of the Company as of
the dates thereof and the results of its operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments). No other information provided by or on behalf
of the Company to the Buyers which is not included in the SEC Documents,
including, without limitation, information referred to in Section 2(d) of
this Agreement, contains any untrue statement of a material fact or omits to
state any material fact necessary in order to make the statements therein, in
the light of the circumstance under which they are or were made, not
misleading. Neither the Company nor any of its Subsidiaries or any of their
officers, directors or employees have provided the Buyers with any material,
nonpublic information.
g. ABSENCE OF CERTAIN CHANGES. Except as disclosed in SCHEDULE
3(g) or the SEC Documents filed on XXXXX at least five business days prior to
the date hereof, since December 31, 1997, there has been no material adverse
change and no material adverse development in the business, properties,
operations, financial condition, liabilities or results of operations of the
Company or its Subsidiaries. The Company has not taken any steps, and does not
currently expect to take any steps, to seek protection pursuant to any
bankruptcy law nor do the Management Employees of the Company or any of its
Subsidiaries have any knowledge or reason to believe that its creditors intend
to initiate involuntary bankruptcy proceedings.
h. ABSENCE OF LITIGATION. There is no action, suit, proceeding,
inquiry or investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the knowledge of the
Management Employees of the Company or any of its Subsidiaries, threatened
against or affecting the Company, the Common Stock or any of the Company's
Subsidiaries or any of the Company's or the Company's Subsidiaries' officers or
directors in their capacities as such which could result in a judgment, decree
or order having a Material Adverse Effect, except as expressly set forth in
SCHEDULE 3(h) or as specifically disclosed in the SEC Documents filed on XXXXX
at least five business days prior to the date hereof.
i. ACKNOWLEDGMENT REGARDING BUYERS' PURCHASE OF PREFERRED SHARES.
The Company acknowledges and agrees that each of the Buyers is acting solely in
the capacity of arm's length purchaser with respect to the Transaction Documents
and the transactions contemplated thereby. The Company further acknowledges
that each Buyer is not acting as a financial advisor or fiduciary of the Company
(or in any similar capacity) with respect to the Transaction Documents and the
Certificate of Designations and the transactions contemplated thereby and any
advice given by any of the Buyers or any of their respective representatives or
agents in connection with the Transaction Documents and the Certificate of
Designations and the transactions contemplated thereby is merely incidental to
such Buyer's purchase of the Securities. The Company further represents to each
Buyer that the Company's decision to enter into the Transaction Documents has
been based solely on the independent evaluation by the Company and its
representatives.
j. NO UNDISCLOSED EVENTS, LIABILITIES, DEVELOPMENTS OR
CIRCUMSTANCES. No event, liability, development or circumstance has occurred or
exists with respect to the Company
-12-
or its Subsidiaries or their respective business, properties, operations or
financial condition, that would be required to be disclosed by the Company
under applicable securities laws on a registration statement filed with the
SEC relating to the issuance and sale by the Company of its Common Stock and
which has not been publicly disclosed.
k. NO GENERAL SOLICITATION. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D under the 0000 Xxx) in connection with the offer or sale of the
Securities.
l. NO INTEGRATED OFFERING. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would require registration of any of
the Securities under the 1933 Act or cause this offering of Securities to be
integrated with prior offerings by the Company for purposes of the 1933 Act or
any applicable stockholder approval provisions, including, without limitation,
under the rules and regulations of NYSE, nor will the Company or any of its
Subsidiaries take any action or steps that would require registration of the
Securities under the 1933 Act or cause the offering of the Securities to be
integrated with other offerings.
m. EMPLOYEE RELATIONS. Neither the Company nor any of its
Subsidiaries is involved in any material union labor dispute nor, to the
knowledge of the Management Employees of the Company or any of its Subsidiaries,
is any such dispute threatened. Except as disclosed in SCHEDULE 3(m), neither
the Company nor any of its Subsidiaries is a party to a collective bargaining
agreement. To the knowledge of the Management Employees of the Company and its
Subsidiaries, relations between the Company and its employees are generally
good. No executive officer (as defined in Rule 501(f) of the 0000 Xxx) has
notified the Company that such officer intends to leave the Company or otherwise
terminate such officer's employment with the Company.
n. INTELLECTUAL PROPERTY RIGHTS. The Company and its Subsidiaries
own or possess adequate rights or licenses to use all trademarks, trade names,
service marks, service xxxx registrations, service names, patents, patent
rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and rights necessary to conduct their respective
businesses as now conducted. Except as set forth on SCHEDULE 3(n), none of the
Company's trademarks, trade names, service marks, service xxxx registrations,
service names, patents, patent rights, copyrights, inventions, licenses,
approvals, government authorizations, trade secrets or other intellectual
property rights have expired or terminated, or are expected to expire or
terminate within two years from the date of this Agreement. The Management
Employees of the Company and its Subsidiaries do not have any knowledge of any
infringement by the Company or its Subsidiaries of trademarks, trade name
rights, patents, patent rights, copyrights, inventions, licenses, service names,
service marks, service xxxx registrations, trade secret or other similar rights
of others, or of any such development of similar or identical trade secret or
technical information by others and, except as set forth on SCHEDULE 3(n), there
is no
-13-
claim, action or proceeding being made or brought against, or to the
Management Employees of the Company's knowledge, being threatened against,
the Company or its Subsidiaries regarding trademarks, trade name rights,
patents, patent rights, inventions, copyrights, licenses, service names,
service marks, service xxxx registrations, trade secrets or other
infringement; and the Management Employees of the Company and its
Subsidiaries have no knowledge of any facts or circumstances which might give
rise to any of the foregoing. The Management Employees of the Company and
its Subsidiaries have taken reasonable security measures to protect the
secrecy, confidentiality and value of all of their intellectual properties.
o. ENVIRONMENTAL LAWS. The Company and its Subsidiaries (i) are
in compliance in all material respects with any and all applicable foreign,
federal, state and local laws and regulations relating to the protection of
human health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("ENVIRONMENTAL LAWS"), (ii) have received
all material permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses and (iii)
are in compliance in all material respects with all terms and conditions of any
such permit, license or approval.
p. TITLE. The Company and its Subsidiaries have good and
marketable title in fee simple to all real property and good and marketable
title to all personal property owned by them which is material to the business
of the Company and its Subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in SCHEDULE 3(p) or such
as do not materially affect the value of such property and do not interfere with
the use made and proposed to be made of such property by the Company or any of
its Subsidiaries. Any real property and facilities held under lease by the
Company or any of its Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings by the
Company and its Subsidiaries.
q. INSURANCE. The Company and each of its Subsidiaries are
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as management of the Company believes to be
prudent and customary in the businesses in which the Company and its
Subsidiaries are engaged. Neither the Company nor any such Subsidiary has been
refused any insurance coverage sought or applied for and neither the Company nor
any such Subsidiary has any reason to believe that it will not be able to renew
its existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not materially and adversely affect the condition,
financial or otherwise, or the earnings, business or operations of the Company
and its Subsidiaries, taken as a whole.
r. REGULATORY PERMITS. The Company and its Subsidiaries possess
all certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses the failure of which to have would individually or in the aggregate
have a Material Adverse Effect, and neither the
-14-
Company nor any such Subsidiary has received any notice of proceedings
relating to the revocation or a material modification of any such
certificate, authorization or permit.
s. INTERNAL ACCOUNTING CONTROLS. The Company and each of its
Subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in accordance with
management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
t. GAMING LAWS. Except as set forth in SCHEDULE 3(t), no Buyer
will be subject to the regulation of any gaming commission or to any gaming
laws, rules or regulations based solely on its purchase of the Securities or its
status as a holder of the Securities.
u. TAX STATUS. Except as set forth on SCHEDULE 3(u), the Company
and each of its Subsidiaries has made or filed all federal and state income and
all other tax returns, reports and declarations required by any jurisdiction to
which it is subject (unless and only to the extent that the Company and each of
its Subsidiaries has set aside on its books provisions reasonably adequate for
the payment of all unpaid and unreported taxes) and has paid all taxes and other
governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and has set aside on its books provision
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. Except as
disclosed in SCHEDULE 3(u), there are no unpaid taxes in any material amount
claimed to be due by the taxing authority of any jurisdiction, and the officers
of the Company know of no basis for any such claim.
v. CERTAIN TRANSACTIONS. Except as set forth on SCHEDULE 3(v) and
in the SEC Documents filed on XXXXX at least five business days prior to the
date hereof and except for arm's length transactions pursuant to which the
Company makes payments in the ordinary course of business upon terms no less
favorable than the Company could obtain from third parties and other than the
grant of stock options disclosed on SCHEDULE 3(c), none of the officers,
directors, or employees of the Company is presently a party to any transaction
with the Company or any of its Subsidiaries (other than for services as
employees, officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
to or from any officer, director or such employee or, to the knowledge of the
Management Employees of the Company, any corporation, partnership, trust or
other entity in which any officer, director, or any such employee has a
substantial interest or is an officer, director, trustee or partner.
-15-
w. DILUTIVE EFFECT. The Company understands and acknowledges
that the number of Conversion Shares issuable upon conversion of the
Preferred Shares will increase in certain circumstances. The Company further
acknowledges that its obligation to issue Conversion Shares upon conversion
of the Preferred Shares in accordance with this Agreement and the Certificate
of Designations is absolute and unconditional regardless of the dilutive
effect that such issuance may have on the ownership interests of other
stockholders of the Company.
x. NO OTHER AGREEMENTS. The Company has not, directly or
indirectly, made any agreements with any Buyers relating to the terms or
conditions of the transactions contemplated by the Transaction Documents except
as set forth in the Transaction Documents.
4. COVENANTS.
a. BEST EFFORTS. Each party shall use its best efforts timely to
satisfy each of the conditions to be satisfied by it as provided in Sections 6
and 7 of this Agreement.
b. FORM D. The Company agrees to file a Form D with respect to
the Securities as required under Regulation D and to provide a copy thereof to
each Buyer promptly after such filing. The Company shall, on or before each of
the Closing Dates, take such action as the Company shall reasonably determine is
necessary to qualify the Securities for, or obtain exemption for the Securities
for, sale to the Buyers at each of the Closings pursuant to this Agreement under
applicable securities or "Blue Sky" laws of the states of the United States, and
shall provide evidence of any such action so taken to the Buyers on or prior to
the Closing Date. The Company shall make all filings and reports relating to
the offer and sale of the Securities required under applicable securities or
"Blue Sky" laws of the states of the United States following each of the Closing
Dates.
c. REPORTING STATUS. Until the earlier of (i) the date which is
one year after the date as of which the Investors (as that term is defined in
the Registration Rights Agreement) may sell all of the Conversion Shares and the
Warrant Shares without restriction pursuant to Rule 144(k) promulgated under the
1933 Act (or successor thereto); or (ii) the date on which (A) the Investors
shall have sold all the Conversion Shares and the Warrant Shares, and (B) none
of the Preferred Shares or Warrants is outstanding (the "REGISTRATION PERIOD");
the Company (I) shall file all reports required to be filed with the SEC
pursuant to the 1934 Act, and (II) except as a result of a Major Transaction
(provided that the Company has complied with Sections 2(d)(iv) and 3(g) of the
Certificate of Designations and Section 9(f) of the Warrants), shall not
terminate its status as an issuer required to file reports under the 1934 Act
even if the 1934 Act or the rules and regulations thereunder would otherwise
permit such termination.
d. USE OF PROCEEDS. The Company will use the proceeds from the
sale of the Preferred Shares and the Warrants for general corporate purposes.
e. FINANCIAL INFORMATION. The Company agrees to send the
following to each Investor (as that term is defined in the Registration Rights
Agreement) during the Registration
-16-
Period: (i) within five days after the filing thereof with the SEC, a copy of
its Annual Reports on Form 10-K, its Quarterly Reports on Form 10-Q, any
Current Reports on Form 8-K and any registration statements or amendments
(other than on Form S-8) filed pursuant to the 1933 Act; (ii) on or prior to
the next business day after the release thereof, facsimile copies of all
press releases issued by the Company or any of its Subsidiaries, and (iii)
copies of any notices and other information made available or given to the
stockholders of the Company generally, contemporaneously with the making
available or giving thereof to the stockholders.
f. RESERVATION OF SHARES. The Company shall take all action
necessary to at all times have authorized, and reserved for the purpose of
issuance, no less than 150% of the number of shares of Common Stock needed to
provide for the issuance of the Conversion Shares and the Warrant Shares
(without regard to any limitations on conversions).
g. RIGHT OF FIRST REFUSAL. Subject to the exceptions described
below, the Company and its Subsidiaries (other than the Indiana Gaming Company,
L.P.) shall not negotiate or contract with any party for any equity financing
(including any debt financing with an equity component) or issue any equity
securities of the Company or any Subsidiary (other than the Indiana Gaming
Company, L.P.) or securities convertible or exchangeable into or for equity
securities of the Company or any Subsidiary (other than the Indiana Gaming
Company, L.P.) (including debt securities with an equity component) in any form
("FUTURE OFFERING") during the period beginning on the date hereof and ending on
and including the date which is 365 days after the Initial Closing Date (or, if
there has been a Put Closing, then the date which is 210 days after the latest
Put Closing Date), unless it shall have first delivered to each Buyer or a
designee appointed by such Buyer written notice (the "FUTURE OFFERING NOTICE")
describing the proposed Future Offering, including the terms and conditions
thereof, and providing each Buyer an option to purchase up to its Aggregate
Percentage (as defined below), as of the date of delivery of the Future Offering
Notice, in the Future Offering (the limitation referred to in this sentence is
referred to as the "CAPITAL RAISING LIMITATION"). For purposes of this Section
4(g), "AGGREGATE PERCENTAGE" at any time with respect to any Buyer shall mean
the percentage obtained by dividing (i) the aggregate number of Preferred Shares
purchased by such Buyer at the Closings by (ii) the aggregate number of
Preferred Shares purchased by all Buyers at the Closings. A Buyer can exercise
its option to participate in a Future Offering by delivering written notice
thereof to participate to the Company within ten business days of receipt of a
Future Offering Notice, which notice shall state the quantity of securities
being offered in the Future Offering that such Buyer will purchase, up to its
Aggregate Percentage, and that number of securities it is willing to purchase in
excess of its Aggregate Percentage. In the event that one or more Buyers fail
to elect to purchase up to each such Buyer's Aggregate Percentage then each
Buyer which has indicated that it is willing to purchase a number of securities
in excess of its Aggregate Percentage shall be entitled to purchase its pro rata
portion (determined in the same manner as described in the preceding sentence)
of the securities in the Future Offering which one or more Buyers have not
elected to purchase. In the event the Buyers fail to elect to fully participate
in the Future Offering within the periods described in this Section 4(g), the
Company shall have 60 days thereafter to sell the securities of the Future
Offering respecting which such Buyer's rights were not exercised, upon terms and
conditions no more favorable to
-17-
the purchasers thereof than specified in the Future Offering Notice. In the
event the Company has not sold such securities of the Future Offering within
such 60 day period, the Company shall not thereafter issue or sell such
securities without first offering such securities to the Buyers in the manner
provided in this Section 4(g). The Capital Raising Limitation shall not
apply to (i) a loan from a commercial bank; (ii) any transaction involving
the Company's issuances of securities (A) as consideration in a merger or
consolidation, (B) in connection with any strategic partnership or joint
venture (the primary purpose of which is not to raise equity capital), or (C)
as consideration for the acquisition of a business, product or license or
other assets by the Company; (iii) the issuance of Common Stock in a firm
commitment, underwritten public offering; (iv) the issuance of Common Stock
at fair market value to Indiana Gaming Company L.P.; (v) the issuance of
securities upon exercise or conversion of the Company's options, warrants or
other convertible securities outstanding as of the date hereof, or (vi) the
grant of additional options or warrants, or the issuance of additional
securities, under any Company stock option plan, restricted stock plan, stock
purchase plan or other plan or written compensation contract for the benefit
of the Company's employees or directors. The Buyers shall not be required to
participate or exercise their right of first refusal with respect to a
particular Future Offering in order to exercise their right of first refusal
with respect to later Future Offerings.
h. LISTING. The Company shall promptly secure the listing of all
of the Registrable Securities (as defined in the Registration Rights Agreement)
upon each national securities exchange and automated quotation system (including
The Nasdaq SmallCap Market and the Nasdaq National Market), if any, upon which
shares of Common Stock are then listed (subject to official notice of issuance)
and shall maintain, so long as any other shares of Common Stock shall be so
listed, such listing of all Registrable Securities from time to time issuable
under the terms of the Transaction Documents and the Certificate of
Designations. The Company shall maintain the Common Stock's authorization for
listing on The Nasdaq SmallCap Market, the Nasdaq National Market or NYSE.
Neither the Company nor any of its Subsidiaries shall take any action which may
result in the delisting or suspension of the Common Stock on The Nasdaq SmallCap
Market, the Nasdaq National Market or NYSE (other than to switch listings from
The Nasdaq SmallCap Market to the Nasdaq National Market or NYSE, from the
Nasdaq National Market to NYSE or from NYSE to The Nasdaq National Market). The
Company shall promptly provide to each Buyer copies of any notices it receives
from The Nasdaq SmallCap Market, the Nasdaq National Market or NYSE regarding
the continued eligibility of the Common Stock for listing on such automated
quotation system or securities exchange. The Company shall pay all fees and
expenses in connection with satisfying its obligations under this Section 4(h).
i. EXPENSES. Subject to Section 9(l) below, following the Initial
Closing, the Company shall reimburse the Buyers for the Buyers' expenses
(including attorneys' fees and expenses) in connection with negotiating and
preparing the Transaction Documents and consummating the transactions
contemplated thereby up to an aggregate of $35,000. In addition, the Company
will reimburse any of the initial Buyers listed on the Schedule of Buyers
(including the equityholders, officers, directors and employees of such Buyer)
for all costs of any investigation by, any filing with or preparation for any
filing with any gaming commission
-18-
concerning the suitability or licensing of such Buyer (or equityholder,
officer, director or employee of such Buyer). The Company shall reimburse
such Buyer (or equityholder, officer, director or employee of such Buyer)
promptly as such costs are incurred and are due and payable. Notwithstanding
the foregoing, such Buyer will repay the Company for any such costs which the
Company has previously reimbursed to such Buyer to the extent there has been
a final, unappealable determination of unsuitability with respect to any
principal, manager, officer or director of such Buyer; and thereafter the
Company will have no further obligation to reimburse such Buyer for costs
relating to the particular investigation which resulted in such final,
unappealable determination of unsuitability.
j. Intentionally omitted.
k. FILING OF FORM 8-K. On or before the second business day
following each of the Closing Dates, the Company shall file a Form 8-K with the
SEC describing the terms of the transaction contemplated by the Transaction
Documents and consummated at such Closing, in each case in the form required by
the 0000 Xxx.
l. PROXY STATEMENT. If on any date (a "PROXY STATEMENT TRIGGER
DATE") after the Initial Closing Date the average of the Closing Bid Prices of
the Common Stock for the five consecutive trading days immediately preceding
such date is equal to or less than $2.75, subject to adjustment for stock
splits, stock dividends, recapitalizations and reclassifications, then the
Company shall provide each stockholder entitled to vote at the next meeting of
stockholders of the Company, which meeting shall not be later than 75 days after
the Proxy Statement Trigger Date (the "STOCKHOLDER MEETING DEADLINE"), a proxy
statement, which has been previously reviewed by the Buyers and a counsel of
their choice, soliciting each such stockholder's affirmative vote at such
stockholder meeting for approval of the Company's issuance of all of the
Securities as described in this Agreement, and the Company shall use its best
efforts to solicit its stockholders' approval of such issuance of the Securities
and cause the Board of Directors of the Company to recommend to the stockholders
that they approve such proposal. Such proxy statement shall not seek approval
of any matters other than the approval described in the preceding sentence and
the election of directors. If the Company fails to hold a meeting of its
stockholders by the Stockholder Meeting Deadline (unless such failure is the
result solely of the actions of the Buyers), then, as partial relief (which
remedy shall not be exclusive of any other remedies available at law or in
equity), the Company shall pay to each holder of Preferred Shares an amount in
cash per Preferred Share equal to the product of (i) $10,000; multiplied by (ii)
.025; multiplied by (iii) the quotient of (x) the number of days after the
Stockholder Meeting Deadline that a meeting of the Company's stockholders is not
held, divided by (y) 30. The Company shall make the payments referred to in the
immediately preceding sentence within five days of the earlier of (I) the
holding of the meeting of the Company's stockholders, the failure of which
resulted in the requirement to make such payments, and (II) the last day of each
30-day period beginning on the Stockholder Meeting deadline. In the event the
Company fails to make such payments in a timely manner, such payments shall bear
interest at the rate of 2.0% per month (pro rated for partial months) until paid
in full. Notwithstanding the provisions of this
-19
Section 4(l), on or prior to a Put Share Notice Date, the Company's
stockholders shall have approved the issuance of the Securities.
5. TRANSFER AGENT INSTRUCTIONS.
The Company shall issue irrevocable instructions to its transfer
agent, and any subsequent transfer agent, to issue certificates, registered in
the name of each Buyer or its respective nominee(s), for the Conversion Shares
and the Warrant Shares in such amounts as specified from time to time by each
Buyer to the Company upon conversion of the Preferred Shares or exercise of the
Warrants, as the case may be (the "IRREVOCABLE TRANSFER AGENT INSTRUCTIONS").
Prior to registration of the Conversion Shares and the Warrant Shares under the
1933 Act, all such certificates shall bear the restrictive legend specified in
Section 2(g) of this Agreement. The Company shall acknowledge Conversion
Notices with respect to the Preferred Shares and Subscription Notices with
respect to the Warrants, as applicable, and in such acknowledgement shall
appropriately instruct its transfer agent as to whether or not the Conversion
Shares or Warrant Shares to be issued pursuant to the Conversion Notice or
Subscription Notice, as the case may be, shall bear the restrictive legend
specified in Section 2(g). After the registration of the Conversion Shares and
the Warrant Shares under the 1933 Act, the Company shall acknowledge Conversion
Notices and Subscription Notices, as applicable, and in such acknowledgement
shall direct its transfer agent to not place the restrictive legend on the
Conversion Shares or Warrant Shares, as the case may be, by marking the "Without
Restrictive Legend" box on the Conversion Notice or Subscription Notice.
Nothing in this Section 5 shall in any way affect the Company's obligation to
deliver Conversion Shares pursuant to Section 2(f) of the Certificate of
Designations or Warrant Shares pursuant to Section 2 of the Warrant. The
Company warrants that no instruction other than the Irrevocable Transfer Agent
Instructions and the instructions regarding the restrictive legend referred to
in this Section 5, and other than stop transfer instructions permitted by the
Irrevocable Transfer Agent Instructions or to give effect to Section 2(f) (in
the case of the Conversion Shares and the Warrant Shares, prior to registration
of the Conversion Shares and the Warrant Shares under the 0000 Xxx) will be
given by the Company to its transfer agent and that the Securities shall
otherwise be freely transferable on the books and records of the Company as and
to the extent provided in this Agreement and the Registration Rights Agreement.
Nothing in this Section 5 shall affect in any way each Buyer's obligations and
agreements set forth in Section 2(g) to comply with all applicable prospectus
delivery requirements, if any, upon resale of the Securities. If a Buyer
provides the Company with an opinion of counsel, in a generally acceptable form,
that registration of a resale by such Buyer of any of such Securities is not
required under the 1933 Act, the Company shall permit the transfer, and, in the
case of the Conversion Shares or the Warrant Shares, promptly instruct its
transfer agent to issue one or more certificates in such name and in such
denominations as specified by such Buyer and without any restrictive legends.
The Company acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to the Buyers by vitiating the intent and purpose of the
transaction contemplated hereby. Accordingly, the Company acknowledges that the
remedy at law for a breach of its obligations under this Section 5 will be
inadequate and agrees, in the event of a breach or threatened breach by the
Company of the provisions of this
-20-
Section 5, that the Buyers shall be entitled, in addition to all other
available remedies, to an injunction restraining any breach and requiring
immediate issuance and transfer, without the necessity of showing economic
loss and without any bond or other security being required.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
a. INITIAL CLOSING DATE. The obligation of the Company hereunder
to issue and sell the Initial Preferred Shares and the related Warrants to each
Buyer at the Initial Closing is subject to the satisfaction, at or before the
Initial Closing Date, of each of the following conditions, provided that these
conditions are for the Company's sole benefit and may be waived by the Company
at any time in its sole discretion by providing each Buyer with prior written
notice thereof:
(i) Each Buyer shall have executed each of this Agreement and the
Registration Rights Agreement and delivered the same to the Company.
(ii) The Certificate of Designations shall have been filed with the
Secretary of State of the State of Delaware.
(iii) All of the Buyers shall have delivered to the Company the
Purchase Price for the Preferred Shares and the related Warrants being
purchased by the Buyers at the Initial Closing by wire transfer of
immediately available funds pursuant to the wire instructions provided by
the Company.
(iv) The representations and warranties of each Buyer shall be true
and correct as of the date when made and as of the Initial Closing Date as
though made at that time (except for representations and warranties that
speak as of a specific date), and such Buyer shall have performed,
satisfied and complied with the covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or
complied with by such Buyer at or prior to the Initial Closing Date.
b. ADDITIONAL CLOSING DATES. The obligation of the Company
hereunder to issue and sell the Additional Preferred Shares and the related
Warrants to the applicable Buyer at each of the Additional Closings is subject
to the satisfaction, at or before the respective Additional Closing Date, of
each of the following conditions, provided that these conditions are for the
Company's sole benefit and may be waived by the Company at any time in its sole
discretion by providing each Buyer with prior written notice thereof:
(i) Such Buyer shall have complied with the requirements of Section
1(c).
(ii) Such Buyer shall have delivered to the Company the Purchase
Price for the Additional Preferred Shares and the related Warrants being
purchased by such Buyer at the Additional Closing by wire transfer of
immediately available funds pursuant to the wire instructions provided by
the Company.
-21-
(iii) The representations and warranties of such Buyer shall be true
and correct in all material respects as of the date when made and as of the
Additional Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date), and such
Buyer shall have performed, satisfied and complied in all material respects
with the covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by such Buyer at or
prior to the Additional Closing Date.
c. PUT CLOSING DATE. The obligation of the Company hereunder to
issue and sell the Put Preferred Shares and the related Warrants to each Buyer
at each Put Closing is subject to the satisfaction, at or before the Put Closing
Date, of each of the following conditions, provided that these conditions are
for the Company's sole benefit and may be waived by the Company at any time in
its sole discretion by providing each Buyer with prior written notice thereof:
(i) Such Buyer shall have delivered to the Company the Purchase
Price for the Put Preferred Shares and the related Warrants being purchased
by such Buyer at the Put Closing by wire transfer of immediately available
funds pursuant to the wire instructions provided by the Company.
(ii) The representations and warranties of such Buyer shall be true
and correct in all material respects as of the date when made and as of the
Put Closing Date as though made at that time (except for representations
and warranties that speak as of a specific date), and such Buyer shall have
performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Transaction Documents
to be performed, satisfied or complied with by such Buyer at or prior to
the Put Closing Date.
7. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.
a. INITIAL CLOSING DATE. The obligation of each Buyer hereunder
to purchase the Initial Preferred Shares and the related Warrants at the Initial
Closing is subject to the satisfaction, at or before the Initial Closing Date,
of each of the following conditions, provided that these conditions are for each
Buyer's sole benefit and may be waived by such Buyer at any time in its sole
discretion:
(i) The Company shall have executed each of the Transaction
Documents, and delivered the same to such Buyer.
(ii) The Certificate of Designations, shall have been filed with the
Secretary of State of the State of Delaware, and a copy thereof certified
by such Secretary of State shall have been delivered to such Buyer.
-22-
(iii) The Common Stock shall be authorized for quotation on The
Nasdaq SmallCap Market or the Nasdaq National Market or listing on NYSE,
trading in the Common Stock issuable upon conversion of the Initial
Preferred Shares to be traded on The Nasdaq SmallCap Market, the Nasdaq
National Market or NYSE shall not have been suspended by the SEC, The
Nasdaq Stock Market, Inc. or NYSE and all of the Conversion Shares issuable
upon conversion of the Initial Preferred Shares to be sold at the Initial
Closing shall be listed upon The Nasdaq SmallCap Market, the Nasdaq
National Market or NYSE.
(iv) The representations and warranties of the Company shall be true
and correct as of the date when made and as of the Initial Closing Date as
though made at that time (except for representations and warranties that
speak as of a specific date) and the Company shall have performed,
satisfied and complied with the covenants, agreements and conditions
required by the Transaction Documents or Certificate of Designations to be
performed, satisfied or complied with by the Company at or prior to the
Initial Closing Date. Such Buyer shall have received a certificate,
executed by the Chief Executive Officer of the Company, dated as of the
Initial Closing Date, to the foregoing effect and as to such other matters
as may be reasonably requested by such Buyer including, without limitation,
an update as of the Initial Closing Date regarding the representation
contained in Section 3(c) above.
(v) Such Buyer shall have received the opinion of Winston & Xxxxxx
dated as of the Initial Closing Date, in form, scope and substance
reasonably satisfactory to such Buyer and in substantially the form of
EXHIBIT C attached hereto; and such Buyer shall have received the opinion
of Xxxxxx X. Xxxxxx, Esq. dated as of the Initial Closing Date, in form,
scope and substance reasonably satisfactory to such Buyer and in
substantially the form of EXHIBIT F.
(vi) The Company shall have executed and delivered to such Buyer (i)
the Stock Certificates (in such denominations as such Buyer shall request)
for the Initial Preferred Shares, and (ii) the Warrants being purchased by
such Buyer at the Initial Closing.
(vii) The Board of Directors of the Company shall have adopted
resolutions consistent with Section 3(b)(ii) above and in a form reasonably
acceptable to such Buyer (the "RESOLUTIONS").
(viii) As of the Initial Closing Date, the Company shall have reserved
out of its authorized and unissued Common Stock, solely for the purpose of
effecting the conversion of the Preferred Shares and exercise of the
Warrants, at least 6,000,000 shares of Common Stock.
-23-
(ix) The Irrevocable Transfer Agent Instructions, in the form of
EXHIBIT D attached hereto, shall have been delivered to and acknowledged in
writing by the Company's transfer agent.
(x) The Company shall have delivered to such Buyer a certificate
evidencing the incorporation and good standing of the Company and each
Subsidiary in such corporation's state of incorporation issued by the
Secretary of State of such state of incorporation as of a date within ten
days of the Initial Closing Date.
(xi) The Company shall have delivered to such Buyer a secretary's
certificate certifying as to (A) the Resolutions, (B) certified copies of
its Certificate of Incorporation and (C) By-laws, each as in effect at the
Initial Closing.
(xii) The Company shall have delivered to such Buyer a certified copy
of its Certificate of Incorporation as certified by the Secretary of State
of the State of Delaware within ten days of the Initial Closing Date.
(xiii) The Company shall have delivered to such Buyer a letter from
the Company's transfer agent certifying the number of shares of Common
Stock outstanding as of a date within five days of the Initial Closing
Date.
(xiv) The Company shall have delivered to such Buyer such other
documents relating to the transactions contemplated by the Transaction
Documents as such Buyer or its counsel may reasonably request.
b. ADDITIONAL CLOSING DATES. The obligation of each Buyer
hereunder to purchase the Additional Preferred Shares and the related Warrants
at each of the Additional Closings is subject to the satisfaction, at or before
the Additional Closing Dates, of each of the following conditions, provided that
these conditions are for each Buyer's sole benefit and may be waived by such
Buyer at any time in its sole discretion:
(i) The Certificate of Designations shall be in full force and
effect and shall not have been amended since the Initial Closing Date, and
a copy thereof certified by the Secretary of State of the State of Delaware
shall have been delivered to such Buyer.
(ii) The Common Stock shall be authorized for quotation on The
Nasdaq SmallCap Market or the Nasdaq National Market or listing on NYSE,
trading in the Common Stock issuable upon conversion of the Additional
Preferred Shares to be traded on The Nasdaq SmallCap Market, the Nasdaq
National Market or NYSE shall not have been suspended by the SEC, The
Nasdaq Stock Market, Inc. or NYSE and all of the Conversion Shares issuable
upon conversion of the Additional Preferred Shares to be sold at the
Additional Closing shall be listed upon The Nasdaq SmallCap Market, the
Nasdaq National Market or NYSE.
-24-
(iii) The representations and warranties of the Company shall be true
and correct as of the date when made and as of the respective Additional
Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date) and the Company shall have
performed, satisfied and complied with the covenants, agreements and
conditions required by the Transaction Documents or the Certificate of
Designations to be performed, satisfied or complied with by the Company at
or prior to the respective Additional Closing Date. Such Buyer shall have
received a certificate, executed by the Chief Executive Officer of the
Company, dated as of such Additional Closing Date, to the foregoing effect
and as to such other matters as may be reasonably requested by such Buyer
including, without limitation, an update as of such Additional Closing Date
regarding the representation contained in Section 3(c) above.
(iv) Such Buyer shall have received the opinion of Winston & Xxxxxx
dated as of such Additional Closing Date, in form, scope and substance
reasonably satisfactory to such Buyer and in substantially the form of
EXHIBIT C attached hereto; and such Buyer shall have received the opinion
of Xxxxxx X. Xxxxxx, Esq. dated as of such Additional Closing Date, in
form, scope and substance reasonably satisfactory to such Buyer in
substantially the form of EXHIBIT F.
(v) The Company shall have executed and delivered to such Buyer (i)
the Stock Certificates (in such denominations as such Buyer shall request)
for the Additional Preferred Shares, and (ii) the Warrants being purchased
by such Buyer at the Additional Closing.
(vi) The Board of Directors of the Company shall have adopted, and
shall not have amended, the Resolutions.
(vii) As of such Additional Closing Date, the Company shall have
reserved out of its authorized and unissued Common Stock, solely for the
purpose of effecting the conversion of the Preferred Shares and exercise of
the Warrants, a number of shares of Common Stock equal to at least 150% of
the number of shares of Common Stock which would be issuable upon
conversion or exercise in full of the then outstanding Preferred Shares and
Warrants, as the case may be, including for such purposes the Additional
Preferred Shares and Warrants to be issued at such Additional Closing.
(viii) The Irrevocable Transfer Agent Instructions, in the form of
EXHIBIT D attached hereto, shall have been delivered to and acknowledged in
writing by the Company's transfer agent.
(ix) The Company shall have delivered to such Buyer a certificate
evidencing the incorporation and good standing of the Company and each
Subsidiary in the state of such corporation's state of incorporation issued
by the Secretary of State of such state of incorporation as of a date
within ten days of such Additional Closing Date.
-25-
(x) The Company shall have delivered to such Buyer a secretary's
certificate certifying as to (A) the Resolutions, (B) certified copies of
its Certificate of Incorporation and (C) By-laws, each as in effect at the
Additional Closing.
(xi) The Company shall have delivered to such Buyer a certified copy
of its Certificate of Incorporation as certified by the Secretary of State
of the State of Delaware within ten days of the Additional Closing Date.
(xii) During the period beginning on the Additional Share Notice Date
and ending on and including the Additional Closing Date, the Company shall
have delivered Conversion Shares upon conversion of the Preferred Shares
and the Warrant Shares upon exercise of the Warrants to the Buyers on a
timely basis as set forth in Section 2(f)(ii) of the Certificate of
Designations and Sections 2(a) and 2(b) of the Warrants, respectively.
(xiii) The Company shall have delivered to such Buyer a letter from
the Company's transfer agent certifying the number of shares of Common
Stock outstanding as of a date within five days of the Additional Closing
Date.
(xiv) The Company shall have delivered to such Buyer such other
documents relating to the transactions contemplated by this Agreement as
such Buyer or its counsel may reasonably request.
c. PUT CLOSING DATE. The obligation of each Buyer hereunder to
purchase the Put Preferred Shares and the related Warrants at each Put Closing
is subject to the satisfaction, at or before the applicable Put Closing Date, of
each of the following conditions, provided that these conditions are for each
Buyer's sole benefit and may be waived by such Buyer at any time in its sole
discretion:
(i) The Company shall have complied with the requirements of
Section 1(d) and all of the Put Notice Conditions set forth in Section 1(e)
shall have been satisfied.
(ii) The Certificate of Designations, shall be in full force and
effect and shall not have been amended since the Initial Closing Date, and
a copy thereof certified by the Secretary of State of the State of Delaware
shall have been delivered to such Buyer.
(iii) The Common Stock shall be authorized for listing on NYSE,
trading in the Common Stock issuable upon conversion of the Put Preferred
Shares to be traded on The Nasdaq SmallCap Market, the Nasdaq National
Market or NYSE shall not have been suspended by the SEC, The Nasdaq
SmallCap Market, The Nasdaq Stock Market, Inc. or NYSE and all of the
Conversion Shares issuable upon conversion of the Put Preferred Shares to
be sold at the Put Closing shall be listed upon The Nasdaq SmallCap Market,
the Nasdaq National Market or NYSE.
-26-
(iv) The representations and warranties of the Company shall be true
and correct in all material respects (except to the extent that any of such
representations and warranties is already qualified as to materiality in
Section 3, in which case such representations and warranties shall be true
and correct without further qualification) as of the date when made and as
of the Put Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date) and the
Company shall have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions required by the
Transaction Documents or the Certificate of Designations to be performed,
satisfied or complied with by the Company at or prior to the Put Closing
Date. Such Buyer shall have received a certificate, executed by the Chief
Executive Officer of the Company, dated as of the Put Closing Date, to the
foregoing effect and as to such other matters as may be reasonably
requested by such Buyer including, without limitation, an update as of the
Put Closing Date regarding the representation contained in Section 3(c)
above.
(v) Such Buyer shall have received the opinion of Winston & Xxxxxx
dated as of the Put Closing Date, in form, scope and substance reasonably
satisfactory to such Buyer and in substantially the form of EXHIBIT C; and
such Buyer shall have received the opinion of Xxxxxx X. Xxxxxx, Esq. dated
as of such Put Closing Date, in form, scope and substance reasonably
satisfactory to such Buyer in substantially the form of EXHIBIT F.
(vi) The Company shall have executed and delivered to such Buyer (i)
the Stock Certificates (in such denominations as such Buyer shall request)
for the Put Preferred Shares, and (ii) the Warrants being purchased by such
Buyer at the Put Closing.
(vii) The Board of Directors of the Company shall have adopted, and
shall not have amended, the Resolutions.
(viii) As of the Put Closing Date, the Company shall have reserved out
of its authorized and unissued Common Stock, solely for the purpose of
effecting the conversion of the Preferred Shares and exercise of the
Warrants, a number of shares of Common Stock equal to at least 150% of the
number of shares of Common Stock which would be issuable upon conversion or
exercise in full of the then outstanding Preferred Shares and the Warrants,
respectively, including for such purposes the Put Preferred Shares and the
Warrants to be issued at such Put Closing.
(ix) The Irrevocable Transfer Agent Instructions, in the form of
EXHIBIT D, shall have been delivered to and acknowledged in writing by the
Company's transfer agent.
(x) The Company shall have delivered to such Buyer a certificate
evidencing the incorporation and good standing of the Company and each
Subsidiary in the state of such corporation's state of incorporation issued
by the Secretary of State of
-27-
such state of incorporation as of a date within ten days of the Put
Closing Date.
(xi) The Company shall have delivered to such Buyer a certified copy
of its Certificate of Incorporation as certified by the Secretary of State
of the State of Delaware within ten days of the Put Closing Date.
(xii) The Company shall have delivered to such Buyer a secretary's
certificate certifying as to (A) the Resolutions, (B) certified copies of
its Certificate of Incorporation and (C) By-laws, each as in effect at the
Put Closing.
(xiii) The Company shall have delivered to such Buyer a letter from
the Company's transfer agent certifying the number of shares of Common
Stock outstanding as of a date within five days of the Put Closing Date.
(xiv) The Company shall have delivered to such Buyer such other
documents relating to the transactions contemplated by this Agreement as
such Buyer or its counsel may reasonably request.
d. FAILURE TO PURCHASE PUT PREFERRED SHARES. If the Put Notice
Conditions and the conditions set forth in Section 7(c) are satisfied and a
Buyer fails to purchase the required Preferred Shares on a Put Closing Date,
then (i) the Fixed Conversion Price for any unconverted Preferred Shares held by
such Buyer will be reset to the higher of (A) the Fixed Conversion Price in
effect immediately prior to the scheduled Put Closing Date, or (B) the Fixed
Conversion Price calculated on the scheduled Put Closing Date based on the
average Closing Bid Price of the Common Stock for the five consecutive trading
days immediately prior to the scheduled Put Closing Date; and (ii) such Buyer
shall not be able to exercise its right to purchase Additional Preferred Shares
until the breach is cured.
8. INDEMNIFICATION. In consideration of each Buyer's execution and
delivery of the Transaction Documents and acquiring the Securities thereunder
and in addition to all of the Company's other obligations under the Transaction
Documents and the Certificate of Designations, the Company shall defend,
protect, indemnify and hold harmless each Buyer and each other holder of the
Securities and all of their stockholders, officers, directors, employees and
direct or indirect investors and any of the forgoing person's agents or other
representatives (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) (collectively, the
"INDEMNITEES") from and against any and all actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith (irrespective of whether any such Indemnitee is a party to
the action for which indemnification hereunder is sought), and including
reasonable attorneys' fees and disbursements (the "INDEMNIFIED LIABILITIES"),
incurred by any Indemnitee as a result of, or arising out of, or relating to (a)
any misrepresentation or breach of any representation or warranty made by the
Company in the Transaction Documents or the Certificate of Designations or any
other certificate, instrument or document contemplated hereby or thereby, (b)
any breach
-28-
of any covenant, agreement or obligation of the Company contained in the
Transaction Documents or the Certificate of Designations or any other
certificate, instrument or document contemplated hereby or thereby, (c) any
cause of action, suit or claim brought or made against such Indemnitee (other
than a cause of action, suit or claim which (i) is brought or made by the
Company and (ii) is not a shareholder derivative suit) and arising out of or
resulting from the execution, delivery, performance, breach or enforcement of
the Transaction Documents or the Certificate of Designations, (d) any
transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Securities, or (e) the
status of such Buyer or holder of the Securities as an investor in the
Company. To the extent that the foregoing undertaking by the Company may be
unenforceable for any reason, the Company shall make the maximum contribution
to the payment and satisfaction of each of the Indemnified Liabilities which
is permissible under applicable law.
9. GOVERNING LAW; MISCELLANEOUS.
a. GOVERNING LAW. The corporate laws of the State of Delaware
shall govern all issues concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
interpreted in accordance with the laws of the State of New York without regard
to the principles of conflict of laws. Each party hereby irrevocably submits to
the non-exclusive jurisdiction of the state and federal courts sitting in the
City of New York, borough of Manhattan, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper. Each party hereby irrevocably waives personal service
of process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.
b. COUNTERPARTS. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party; provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.
-29-
c. HEADINGS. The headings of this Agreement are for convenience
of reference and shall not form part of, or affect the interpretation of, this
Agreement.
d. SEVERABILITY. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
e. ENTIRE AGREEMENT; AMENDMENTS. This Agreement supersedes all
other prior oral or written agreements between the Buyers, the Company, their
affiliates and persons acting on their behalf with respect to the matters
discussed herein, and this Agreement and the instruments referenced herein
contain the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or
therein, neither the Company nor any Buyer makes any representation, warranty,
covenant or undertaking with respect to such matters. No provision of this
Agreement may be amended other than by an instrument in writing signed by the
Company and the holders of at least two-thirds (2/3) of the Preferred Shares and
the Conversion Shares held by holders or former holders of the Preferred Shares
(determined on an as converted to Common Stock basis at the time of such
determination) then outstanding, and no provision hereof may be waived other
than by an instrument in writing signed by the party against whom enforcement is
sought. No such amendment shall be effective to the extent that it applies to
less than all of the holders of the Preferred Shares then outstanding. No
consideration shall be offered or paid to any person to amend or consent to a
waiver or modification of any provision of any of the Transaction Documents or
the Certificate of Designations unless the same consideration also is offered to
all of the parties to the Transaction Documents or holders of the Preferred
Shares, as the case may be.
f. NOTICES. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by facsimile
(provided confirmation of transmission is mechanically generated and kept on
file by the sending party); or (iii) upon receipt, when delivered by a delivery
service, in each case properly addressed to the party to receive the same. The
addresses and facsimile numbers for such communications shall be:
If to the Company:
Argosy Gaming Company
000 Xxxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: President
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With a copy to:
Winston & Xxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxx, Xx.
If to the Transfer Agent:
Xxxxxx Trust & Savings Bank
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxxxx
If to a Buyer, to its address and facsimile number on the Schedule of
Buyers, with copies to such Buyer's representatives as set forth on the Schedule
of Buyers.
Each party shall provide five days' prior written notice to the other party
of any change in address or facsimile number.
g. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
assigns, including any purchasers of the Preferred Shares. The Company shall
not assign this Agreement or any rights or obligations hereunder without the
prior written consent of the holders of two-thirds of the Preferred Shares then
outstanding, including by merger or consolidation. A Buyer may assign some or
all of its rights hereunder without the consent of the Company; provided,
however, that any such assignment shall not release such Buyer from its
obligations hereunder unless such obligations are assumed by such assignee and
the Company has consented to such assignment and assumption, and that any such
assignment is subject to all applicable gaming laws, rules and regulations of
the jurisdictions in which the Company or one of its Subsidiaries is licensed.
Notwithstanding anything to the contrary contained in the Transaction Documents,
each Buyer shall be entitled to pledge the Securities in connection with a bona
fide margin account.
h. NO THIRD PARTY BENEFICIARIES. This Agreement is intended for
the benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
i. SURVIVAL. Unless this Agreement is terminated under Section
9(l), the representations and warranties of the Company and the Buyers contained
in Sections 2 and 3, the agreements and covenants set forth in Sections 4, 5 and
9, and the indemnification provisions set forth in Section 8, shall survive each
of the Closings, subject to the limitations set forth in
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Section 8. Each Buyer shall be responsible only for its own representations,
warranties, agreements and covenants hereunder.
j. PUBLICITY. The Company and each Buyer shall have the right to
approve before issuance any press releases or any other public statements with
respect to the transactions contemplated hereby; provided, however, that the
Company shall be entitled, without the prior approval of any Buyer, to make any
press release or other public disclosure with respect to such transactions as is
required by applicable law and regulations (although each Buyer shall be
consulted by the Company in connection with any such press release or other
public disclosure prior to its release and shall be provided with a copy
thereof).
k. FURTHER ASSURANCES. Each party shall do and perform, or cause
to be done and performed, all such further acts and things, and shall execute
and deliver all such other agreements, certificates, instruments and documents,
as the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
l. TERMINATION. In the event that the Initial Closing shall
not have occurred with respect to a Buyer on or before three business days
from the date hereof due to the Company's or such Buyer's failure to satisfy
the conditions set forth in Sections 6 and 7 above (and the nonbreaching
party's failure to waive such unsatisfied condition(s)), the nonbreaching
party shall have the option to terminate this Agreement with respect to such
breaching party at the close of business on such date without liability of
any party to any other party; provided, however, that if this Agreement is
terminated pursuant to this Section 9(l), the Company shall remain obligated
to reimburse the non-breaching Buyers for expenses up to the amount described
in Section 4(i).
m. PLACEMENT AGENT. The Company acknowledges that it has engaged
Xxxxxxx Xxxxx Barney as placement agent in connection with the sale of the
Preferred Shares and the related Warrants, which placement agent may have
formally or informally engaged other agents on its behalf. The Company shall be
responsible for the payment of any placement agent's fees or brokers commissions
relating to or arising out of the transactions contemplated hereby. The Company
shall pay, and hold each Buyer harmless against, any liability, loss or expense
(including, without limitation, attorneys' fees and out of pocket expenses)
arising in connection with any such claim.
n. NO STRICT CONSTRUCTION. The language used in this Agreement
will be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.
o. REMEDIES. Each Buyer and each holder of Preferred Shares or
Conversion Shares shall have all rights and remedies set forth in the
Transaction Documents and the Certificate of Designations and all rights and
remedies which such holders have been granted at any time under any other
agreement or contract and all of the rights which such holders have
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under any law. Any person having any rights under any provision of this
Agreement shall be entitled to enforce such rights specifically (without
posting a bond or other security), to recover damages by reason of any breach
of any provision of this Agreement and to exercise all other rights granted
by law.
p. PAYMENT SET ASIDE. To the extent that the Company makes a
payment or payments to the Buyers hereunder or pursuant to the Certificate of
Designations or the Buyers enforce or exercise their rights hereunder or
thereunder, and such payment or payments or the proceeds of such enforcement or
exercise or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by or are
required to be refunded, repaid or otherwise restored to the Company, a trustee,
receiver or any other person under any law (including, without limitation, any
bankruptcy law, state or federal law, common law or equitable cause of action),
then to the extent of any such restoration the obligation or part thereof
originally intended to be satisfied shall be revived and continued in full force
and effect as if such payment had not been made or such enforcement or setoff
had not occurred.
* * * * * *
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IN WITNESS WHEREOF, the Buyers and the Company have caused this Securities
Purchase Agreement to be duly executed as of the date first written above.
COMPANY: BUYERS:
ARGOSY GAMING COMPANY THEMIS PARTNERS L.P.
By: Promethean Investment Group L.L.C.
Its: General Partner
By:
------------------------------
Name:
Its: By:
--------------------------------------
Name: Xxxxx X. X'Xxxxx, Xx.
Its: President
HERACLES FUND
By: Promethean Investment Group L.L.C.
Its: Investment Advisor
By:
--------------------------------------
Name: Xxxxx X. X'Xxxxx, Xx.
Its: President
AGR HALIFAX FUND, LTD.
By: AG Ramius Partners, LLC
Its: Investment Advisor
By:
--------------------------------------
Name:
Its: Managing Officer
[Signature Page to Securities Purchase Agreement - p. 2 of 3]
XXXXXXXX, L.P.
By: Xxxxxx, Xxxxxx & Co., L.P.
Its: General Partner
By:
---------------------------------------
Name: Xxxxxxx X. Xxxxxx
Its: Chief Operating Officer
RAPHAEL, L.P.
By:
--------------------------------------
Name: Xxxxxxx X. Xxxxxx
Its: Chief Operating Officer
RAMIUS FUND, LTD.
By: AG Ramius Partners, L.L.C.
Its: Investment Advisor
By:
--------------------------------------
Name: Xxxxxxx X. Xxxxxx
Its: Managing Officer
GAM ARBITRAGE INVESTMENTS, INC.
By: Xxxxxx, Xxxxxx & Co., L.P.
Its: Investment Advisor
By:
--------------------------------------
Name: Xxxxxxx X. Xxxxxx
Its: Chief Operating Officer
[Signature Page to Securities Purchase Agreement - p. 3 of 3]
AG SUPER FUND INTERNATIONAL PARTNERS, L.P.
By: Xxxxxx, Xxxxxx & Co., L.P.
Its: General Partner
By:
--------------------------------------
Name: Xxxxxxx X. Xxxxxx
Its: Chief Operating Officer
